performance management system of bank alfalah

7/28/2019 Performance Management System of Bank Alfalah

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MANAGEMENT


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Table of ContentsIntroduction of the Company .............................................................................................. 1Scope of the Study .............................................................................................................. 1Performance Management System ..................................................................................... 2Objective of Performance Management System (PMS) ..................................................... 2Principles of PMS in Bank Alfalah ..................................................................................... 4Performance Management Process ..................................................................................... 5

1. Planning ...................................................................................................................... 52. Coaching ..................................................................................................................... 63. Reviewing ................................................................................................................... 74.Rewarding .................................................................................................................... 8

Analysis of Bank Alfalah Performance Appraisal System ................................................. 91. Strengths of Performance Management System: ........................................................ 92. Weaknesses of Performance Appraisal ..................................................................... 11

Recommendations: ............................................................................................................ 12Conclusion: ....................................................................................................................... 14


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Introduction of the Company

Bank Alfalah Limited is a private bank in Pakistan owned by the Abu Dhabi Group. Bank

Alfalah was incorporated on June 21, 1992 as a public limited company under the Companies

Ordinance 1984. Its banking operations commenced from November 1, 1992. The bank is

engaged in commercial banking and related services as defined in the Banking companies

ordinance, 1962. Bank Alfalah is the 6th largest bank of Pakistan with 471 branches spanning

163 cities across the country.

After a few years, the bank introduced its new identity of H.C.E.B after the privatization in 1997.

The management of the bank had implemented strategies and policies so the bank would become

a major player in the market. With a partnership with the Abu Dhabi Group the position of the bank

became stronger which allowed the bank to invest more in technology to increase its range ofproducts and services

The last year was particularly significant in the Banks history - a year of transformation,

productivity and forward-looking change in order to maximize value for shareholders. Over the last

year, the bank has drawn upon the strengths and witnessed increasing successes whilst

attempting to positively tackle periodic challenges. The bank has reassessed their operating

priorities, whilst ensuring that overall growth trajectory sustains its momentum. The bank is proud

to report that it has emerged well by following its strategic roadmap, despite the challenging

macro-economic environment. They have closed the year with solid financial results, premier

industry-wise rankings and robust expansion and growth. Due to the efforts of their entire team,

they are pleased to report that their deposits, advances and profitability have all witnessed

significant growth over the last year

Scope of the Study The study focused on analysis of currently implemented system of Bank Alfalah

Limited, integration of PMS into existing HR functions and use of PMS in

organization processes.

The target population to study the system was managers and lower staff.

The primary information was collected from 15-20 employees of head office by

conducting informal interviews.


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Performance Management SystemPerformance Management is a process for establishing a share understanding (two way

communications between employee and supervisor) a pout what is to be achieved and how

it is to be achieved, and an approach to manage people that increases the profitability ofachieving success.

Performance Management is a continuously improvement process, which defines,

develops, reviews, and recognizes performances and support the individual, the business

unit and the entire organization. The document sets out to explain the essential points of

the Performance Management Cycle in Bank Alfalah which consists of following points;

1. Planning.

2. Coaching.

3. Reviewing.

4. Rewarding.

Objective of Performance Management System (PMS)The major objective of PMS is to provide and unambiguous introduction to the changes to

the performance management cycle and about what the various stages involved in the

process mean. The objective of PMS can be set in two dimension; one for employees

performance and second for organizational performance.

The majorobjectives of performance management are discussed below:

To enable the employees towards achievement of superior standards of work

performance.

To help the employees in identifying the knowledge and skills required for

performing the job efficiently as this would drive their focus towards

performing the right task in the right way.

Boosting the performance of the employees by encouraging employee

empowerment, motivation and implementation of an effective reward

mechanism.

Promoting a two way system of communication between the supervisors and the

employees for clarifying expectations about the roles and accountabilities,

communicating the functional and organizational goals, providing a regular


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Principles of PMS in Bank AlfalahThe Bank Alfalah Performance Management Cycle is built on number of guidingprinciples;

Performance Management is a comprehensive process which;

Aligns individuals, teams and organizational objectives

Stretches performance

Informs compensations

Supports individual and career developments

There should be a consistent methodology for assessment of every Bank employee

performance across all areas.

Good performance management is based on the continuous, honest and constructive

dialogue between supervisor and employee.

Performance assessment is based on individuals total contribution throughout the

performance year.

Goals and objectives, as laid out at the beginning of the appraisal process, should be

SMART.

The sufficient support and training is given to both employees and people supervisors

to reach the agreed performance level, where this might not be happening.


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Performance Management ProcessThe Performance Management Process is shown as under;

1. PlanningThe Process consists of following points;

The 1st

step in the Performance Management Process is to set challenging goals. To be

effective, goals must be SMART; i.e. specific, measureable, attainable, relevant and

timed.

Document the established goals on the Performance Planning Form and send a copy of

it to HR at the start of the PM cycle.

Employee should actively set goals, consider the Whats and Hows which are most

applicable to you and your role in the next 12 months.

What Goals; for each area of contribution, identify how you can stretch your

performance in the following performance indicators; Quality, Quantity, Cost,

Timeliness.

How Goals; You should read and understand the core Behavioral competencies,

especially the behavioral expectation of each competencies.


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Discuss and complete your Performance Agreement with your supervisor.

Each employee must be assessed against both SMART goals with account for 70% of

their final performance assessment and the Core Behavioral Competencies which

make up other 30% of the performance assessment score. Each SMART goal isweighted (%) according to the importance it has in the employees job. The

weighting of all SMART goals adds up to 100%.

2. Coaching

The Process consists of following steps;

Both you and your supervisor will need to commit to setting aside time to share

Performance Feedback. Your supervisor will give you feedback informally throughout

the year to track progress and provide coaching. It is mandatory that you have one

face to face mid-year review of performance. Ask your supervisor for this feedback if

you do not receive it.

Ongoing dialogue, one to one discussions, no matter how brief or informal, is at the

heart to good performance management. It is the quality of this ongoing feedback and

coaching that will determine whether we meet the performance challenges.

Documentation of Performance (Performance Log)and 1 to 1s (One to One Form)

will serve as valuable guidance and evidence for full-year review and you are

encouraged to do so for each employee and to encourage employees to maintain their

own performance Log.

During mid-year review and feedback discussions, SMART goals should be reviewed

by Supervisors to confirm continued relevance if needed, any adjusted Performance

Planning Formmust be sent to HR for their record. These adjustments are not to be

used to reduce the challenge of the goals already set, but for realignment to Bank

Alfalah strategy if required.

If underperformance is observed then a performance improvement plan may need to

be created.


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3. Reviewing

Every Bank Alfalah employee will participate in a formal, documented annual

performance review with their supervisor. The review will assess each individuals total

contribution during that year, including SMART goal achievement and role performance

and displays behavior and competencies. The process consists of following steps.

Consider the overall performance in the year. What has gone well and what has been

difficult (Self evaluation form is used for it). Also consult the Performance Log that

has been maintained in order to make a holistic and fair self evaluation.

Thinking ahead, what can be done to improve performance in the next year. (SMART

Goal Worksheet)

Supervisor should use the annual review to consolidate a clear view of the employees

total contribution for the whole performance year. It is essential that the supervisor has

the courage to provide honest and high quality feedback. This level of maturity in the

relationship is necessary to make a genuine difference.

Ensure to communicate a clear assessment of the employees performance forthe

year. This covers total contribution, including the Whats and Hows and that each

employees knows what is required to improve performance and what support will be

provided in the coming year to achieve this.

Complete all parts of the performance agreement and calculate the employees final

performance rating and category.

Overall Performance

Rating

Performance Category Definition

2.603.00 Excellent Consistently exceeded

expectations.

1.50 02.59 Performing Consistently met

expectation.

Up to 1.49 Partially performing Did not consistently meetexpectations.


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4. Rewarding

The classification of individuals into Performance Categories is intended to help catalyze

honest feedback, focus improvement and distribute compensation fairly. There will

however be a necessarily broad range of performance within each of these categories.Therefore supervisor must provide specific feedback to individuals.

To help maintain consistent standards and further encourage management accountability

for challenging debates around performance, bank would normally expect the majority of

pools to be distributed broadly as fellows;

Performance Category Definition

Excelling Around 25%

Performing Around 60%

Partially Performing Around 15%

This resulting distribution will be reviewed by the manager at the next level and overall by

the Head of Department.

Linkage with the System:

This rewarding system is directly or indirectly linked with compensation and development

of employees.

Link to Compensation:

Banks performance management system is driven by a combination of annual inflation

officially announced by the Govt of Pakistan for the period under review and overall

performance in the job. Official inflation figures announced by Govt source will guide the

management in determining inflation related increases in salary. The overall performance

in the job will be assessed by a combination of measured performance and management

judgment which will lead to comparative ranking within pools of similar jobs. The

performance bonus payout is therefore a combination of inflation related, plus merit

related increase. For each performance category there is a range defined and it is the Head

of Departments accountability to manage and differentiate the payout in line with the

Performance rating given.

Link to Development:


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Pre Assessment of Employee Performance

Through performance evaluation at Bank Alfalah, the supervisors can identify the

strengths, weaknesses, job knowledge, skills and commitment of an employee. Anemployee comes to know about his key work areas and also the areas he needs

improvement and has to work upon. He also gets a better understanding of the

organization's needs and expectations.

Right Placement of Employee

It helps to recognize the goals and objectives of an employee. Sometimes, through the

appraisal, the managers may tap the interests, skills and proficiencies of an employee that

may be suitable for some other job in the organization. This helps to ensure that an

employee is being utilized effectively. Identifying people with right skills helps an

organization achieve its mission and objectives and contributes to an employee's overall

growth as well.

Employee Commitment

This process is a viable tool for establishing and maintaining an open communication

between supervisors and employees, and enhances employee commitment and

productivity.

Continuous Feedback:

The performance management system at Bank Alafalah Limited encourages continuous

feedback on employee performance and ensures midterm review of performance enabling

the system to provide continuous feedback throughout the year.


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Objective Evidence:

The PMS of the Bank provides objective evidence of the performance and encourages

maintaining a PERFORMANCE LOG at both endsat supervisor end and employee end.This performance log helps to reach an agreement on performance between employee and

the supervisor.

2. Weaknesses of Performance Appraisal

On the downside, appraisals have been criticized on a lot of grounds. One of the

arguments against performance appraisals is that they get affected by office politics.

Personal Assessment

The superior or the manager may not assess his subordinates fairly. Instead of basing his

evaluation on the employee's actual behavior, the manager might give his feedback on the

basis of his personal likings and disliking.

Biased Managers

Managers sometimes show bias towards employees with whom they have a friendly

relationship as compared to those who are just acquaintances. This creates nepotism and

negativity in the workplace and hampers the morale of hard-working employees.

Lack of Training

There is need of Training at many areas Employees and Managers do not understand

about the PMS forms, and especially for new hired employees.

Transfer of Assignment and Change of GoalsEmployee transfers after their Goal settings and at new department the new Goals setting

assignment performed, at the time of Performance appraisal the employee performance

evaluated from two departments and the calculation of goals at current PMS is not

possible there is not any other option for change of goals or assessment from more than

one department.


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Recommendations:

Although Bank Alfalah Performance management system is working good but still there

are some chances of improvement so we suggest the following recommendation:

1. We recommend that Bank Alfalah which has successfully implemented the

Performance Management System should, as further step, consider the advisability of

reviewing the PM cycle every year for further improvement.

2. We recommend that Supervisors should be unbiased during conducting Performance

Appraisal because this creates nepotism and negativity at work place and moral of the

other workers get down. This also increases turn over in the organization.

3. We also further recommend that proper training should be given to supervisory staff

conducting and implementing performance management system.4. We further recommend that organization should ensure the timely implementing and

monitoring of PMS in all departments of the Bank.

5. We recommend that Bank focus on development programs to:

a. Motivate employees to give their best.

b. Support succession planning, career and personal development.

6. We recommend that regular customer service survey should be carried out to track the

degree of dissatisfaction from stakeholders on namely; timeliness in the provision of

services, competency of staff in delivery and effectiveness of service deliver.

7. We also recommend that strong communication should be established between

supervisors and staff for effective implementation of Performance Management

System.

8. We also recommend that feedback on performance should always be constructive it

should based on CEDAR approach i.e.

Clarify the performance expectations

Explain how you think that person has performed

Discuss the reason of difference between.

Agree on steps to fix the problems

Review the outcome


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Conclusion:

The performance management system at Bank Alfalah Limited is designed to achieve the

objectives of a good performance management system. The implementation part has been

noticed to be good.

This system has incorporated many necessary elements of a fruitful Performance

Management System, but still there are some issues this system does not address. The

system has no any answer to the question, what if objectives of all the employees are not

set within time. Similarly, all the objectives are reached to HR department, but there is no

guideline for HR department for any value addition to the objective setting from HR

department like; does HR department check at the end of the performance year if the

employee is evaluated on the basis of the objectives already set or the objectives have

been changed without any justification and information to HR Department. There is no

linkage between the individual objectives and organizational objectives. Who is

responsible to align individual objectives with strategic objectives?

This system also does not elaborate the mechanism to eliminate bias. On changing job

responsibilities during the year, how employee will be evaluated to his previous objectives

and current objectives?

The PMS of Bank Alfalah Limited is one of the good performance management systems

which contain all the necessary elements but there is always lot of room for further

improvements.

performance management system of bank alfalah

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